DOLLAR-SING: The MAS decided to tighten MonPol.......>

DOLLAR-SING: The MAS decided to tighten MonPol today, which will see the slope

of the SGD's policy band steepen slightly from zero percent previously in place.

The width & mid-point of the band remain unchanged.

- Separately, Singapore's real GDP growth came in at 4.3% Y/Y in Q1 vs. 3.6% Y/Y

in Q4, suggesting that the economy is robust enough to withstand the effects of

a stronger SGD.

- The tightening was widely exp. & USDSGD did not move much following the

decision. Changes in the MAS' currency policy tend to have little impact on the

short-term direction of USDSGD as the currency is managed against an undisclosed

basket of trading partners' currencies.

- In the longer-term the appreciatory bias should lead to a resumption in the

long-term downtrend of USDSGD & a recovery in the SGD relative to its Asian

peers. As we argued in a previous article "Singapore Dollar Set To Outperform

Chinese Yuan" (For Full Story See Main Wire At 08:01 GMT 04/11), we see the

potential for SGD to outperform CNH as the former has become very cheap relative

to the latter & interest rate differentials are moving in the SGD's favour.